Badenoch has a brilliant idea — will Reeves steal it?

It is what they call fox hunting season in Westminster, when parties race to steal their opponents’ best policies. To “shoot the fox” is to spoil the hunters’ fun. It is a brutal and ruthless sport — and so far, Kemi Badenoch is winning. Her “fox” — her pledge to abolish stamp duty — was a theatrical coup that sent Conservatives home from their conference happier than they had any right to be. And it makes a difficult Budget for Rachel Reeves even harder. When we describe this Budget as “difficult”, we are using the word in its high mandarin sense, by which a senior civil servant might advise a minister that the government may soon be entering a terminal crisis.

Reeves is going to have to raise taxes substantially, having said last year that she wouldn’t, and cut spending plans — if there is anything that Labour MPs will let her cut. Now Badenoch offers a tax cut which is even more popular than most, paid for by stopping the growth in welfare spending, which is also popular, except with Labour MPs. It does not alter the arithmetic facing the chancellor, but it shifts the politics further against her. The taxation of housing can move the political market. George Osborne spooked Gordon Brown in 2007, proposing in his Tory conference speech to raise the threshold for inheritance tax on the family home. Alistair Darling had to respond with a smaller tax cut in his Budget, but Brown was put off an early election — a decision that he handled so badly that he never really recovered.

Badenoch’s policy will also give her something to say when she replies to the Budget, a task that traditionally falls to the leader of the opposition, and which is one of the most testing duties that the “worst job in politics” demands. It will dismay and divide the Labour side of the Commons. Labour MPs would love to abolish stamp duty. Even hard-headed Labourites, who realise that taxes have to go up, and that more borrowing is a Truss-like fantasy that would be a V-sign to the bond markets — even they would rather raise taxes on almost anything else. They know, because Paul Johnson, recently of the Institute for Fiscal Studies, devoted a great deal of his time there to explaining it, that stamp duty is a terrible tax. It gums up the housing market, trapping people in houses that are too big or too small, restricting labour mobility and suppressing economic activity. “Movers, builders, decorators. Flat pack furniture and DIY. Trips to Next, John Lewis and IKEA,” as Badenoch put it.

So how can Reeves respond? She could do something like Darling did 18 years ago. She could cut stamp duty as a step towards abolishing it altogether at some date in the distant future. Unfortunately for her, she would have to replace it with another tax on property, because there is no way that she can cut spending enough to avoid having to put taxes up overall. (The Tories’ “£47bn a year” of spending cuts is mostly fiction, only slightly more credible than Nigel Farage’s plans, which are not just fiction but fantasy fiction.) I assume that one of Reeves’s options is a mansion tax, an annual levy on more expensive properties that would be like a council tax surcharge. Badenoch’s plan may tempt Reeves to increase such a tax and lower the house price at which it starts – in order to pay for a stamp duty cut.

If so, it would be an improvement in the tax system and a useful contribution to social justice. An annual charge on the value of people’s homes is a much more efficient way of raising money than a tax on moving house. At the moment, council tax is a bad one, based on out-of-date valuations and unfairly hitting cheap homes more heavily than expensive ones.